Banks start linking Loans to Customers’ risk profile
Banks start linking Loans to Customers’ risk profile https://www.fundstiger.com/banks-linking-loans-customers-risk/ Three public-sector lenders Bank of Baroda, Union Bank of India and Syndicate Bank have taken the first steps in transparently segregating retail loans into their own versions of prime and subprime risk exposure, using third-party credit scores of potential borrowers to offer them different home loan interest rates. Under the new external benchmarking regime, Bank of Baroda, for instance, will be using three credit score slabs from the Credit Information Bureau (India) Ltd (Cibil) to price new home loans. Customers with high credit score, defined in excess of 760 out of a maximum 900, will pay 1% lower interest compared with those reporting scores in 675-724 range the lowest score slab at which loans will be offered. Customers logging scores above 760 will now pay 8.1% on new loans at Bank of Baroda, while those in the third slab will pay 9.1%. The cost of financi...